Major Sanctions Developments
EU, UK Announces Phaseout of Russian Oil Imports. The UK announced a gradual drawdown of Russian oil within one year. Britain imports around 8 percent of its oil supplies from Russia. The UK government is expected to make a further statement on imports of Russian gas later this week. The EU also announced a two-thirds reduction of Russian gas imports within one year. Moscow supplies 40 percent of the EU’s gas and a quarter of its crude oil. The EU aims to import more liquefied natural gas, increase the amount of wind and solar energy, produce biogas, and reduce demand by insulating homes and asking people to turn down their central heating.
U.S. Treasury Releases Guidance on Russian Oil Import Ban Executive Order. The U.S. Department of the Treasury announced that contracts for the purchase of Russian oil, liquefied natural gas, and coal that were entered into by Americans before 8 March will be allowed. In its latest guidance, the department announced that contracts signed before the cutoff date will be respected by the U.S. government until 22 April despite the new executive order ban on the import of Russian fuels. The executive order also prohibits U.S. citizens from investing in Russia’s energy sector.
EU Member States Approve New Sanctions Package Against Russia, Belarus. The European Union approved a new sanctions package targeting Russian elites and Belarusian banks. The measures blacklist 14 more oligarchs and freeze relations with the central bank of Belarus. Additionally, three Belarusian banks—Belagroprombank, Bank Dabrabyt, and the Development Bank of the Republic of Belarus—will be excluded from the SWIFT messaging network. According to Reuters, “Altogether, EU restrictive measures now apply to a total of 862 individuals and 53 entities linked to the invasion of Ukraine.”
UK Strengthens Ban on Russian Aircraft, Announces New Trade Sanctions. UK Foreign Secretary Liz Truss announced new aviation sanctions, giving the government new powers to detain any Russian aircraft in the UK. The British government also strengthened overflight and landing bans on Russian aircraft, instituting new legislation to make it a criminal offense for any Russian aircraft to fly or land in the UK. The ban covers any aircraft owned, operated, or chartered by individuals with links to the Russian government or sanctioned individuals and entities. The new measures also prohibit exports of aviation or space-related items and technology, including technical assistance, to Russia, and ban UK companies providing insurance and re-insurance services in relation to these goods.
Sanctions Effects and Enforcement
Rating Agency Fitch Downgrades Russia Credit Rating to “C,” Says Default “Imminent.” Rating agency Fitch downgraded Russia from a rating of “B” to a “C,” and declared a bond default “imminent.” According to Fitch, the “C” rating reflects major concern for Russia’s ability and willingness to service its debt. Moreover, on the Fitch Ratings scale, a “C” rating is an indication that a default process has begun or that “payment capacity is irrevocably impaired.”
More Multinationals Leave Russia. On 8 March, Italian luxury carmaker Ferrari cancelled further shipments to Russia and Lumen Technologies announced it will pull out of Russia.
Sanctions Outlook
EU Eyes Sanctions Against Organizations Promulgating Disinformation. The European Union will propose a new sanctions regime to stop disinformation campaigns executed by Russian state-owned media. Josep Borrell, foreign policy chief at the EU, told the European Parliament that the EU should have the ability to freeze assets and issue travel bans to groups that proliferate false information. Borrell also pointed out that he will not dictate what is true or false information, but the mechanism will be designed to protect individuals against manipulation. The proposal follows European Commission President Ursula von Der Leyen’s announcement to ban Russian media channels.
Estonia Prime Minister Urges Cryptocurrency Restrictions to Prevent Russia from Evading Sanctions. Estonian Prime Minister Kaja Kallas called for the closing of loopholes in international sanctions imposed against Russia over its invasion of Ukraine, including cryptocurrencies that may be used to evade sanctions. Speaking at a joint news conference with U.S. Secretary of State Antony Blinken, Kallas said all Russian and Belarusian banks must be removed from the SWIFT international messaging system and restrictions should be imposed on cryptocurrencies. She said the focus must be on “full isolation of Russia from the free world.”
Japan Considers Withdrawal from Joint Energy Project. Japanese firms are considering pulling out of energy projects jointly developed with Russia in Sakhalin. Mitsubishi and Mitsui have stakes in the massive Sakhalin-2 LNG project recently abandoned by Shell, while Marubeni and Itochu have invested in the Sakhalin-1 oil project that Exxon Mobil is now pulling out of.
